State Street (STT) AI Stock Analysis

Compare

1,089 Followers

Top Page

State Street

(NYSE:STT)

Select Model

Neutral 66 (OpenAI - 5.2)

Rating:66Neutral

Price Target:

$138.00

▲(4.85% Upside)

Action:DowngradedDate:02/20/26

STT scores highest on outlook and execution signals from the latest earnings call (constructive 2026 guidance and operating leverage) and reasonable valuation (mid-teens P/E with a ~2.5% yield). The main constraint is financial quality of cash generation, where highly volatile operating/free cash flow reduces confidence in cash predictability; technically, momentum is neutral with short-term softness versus the 20/50-day averages.

Positive Factors

Record fee & asset growth

Sizable, recurring fee revenue tied to record AUM and sustained net inflows supports durable earnings. A broad institutional client base and product launches (134 new products in 2025) deepen client relationships, making fee streams more stable and scalable over years.

Productivity enabling reinvestment

Material recurring cost savings improve operating leverage and create capacity to fund strategic investments (software, SaaS, AI) without eroding margins. This enhances long-term competitiveness while supporting targeted growth initiatives and capital returns.

Strategic international expansion

Expanding regional hubs and alliances (Middle East operating center, QNB partnership) strengthens proximity to sovereign and institutional clients, diversifies revenue geographies, and builds local talent pipelines—structural drivers of long-term market share and servicing growth.

Negative Factors

Erratic cash generation

Large swings in operating and free cash flow reduce predictability for dividends, buybacks and reinvestment. This variability elevates financing and execution risk, making capital allocation harder to plan and weakening confidence in sustained cash returns to shareholders.

SaaS transition lumpiness

Shifting revenue from on‑prem license/renewals to recurring SaaS can depress near-term fee recognition and create timing volatility. The transition requires continued investment and execution risk; until subscription scale is reached, revenue and margin patterns may remain inconsistent.

Leverage variability & capital tradeoffs

Although leverage is moderating, variability historically amplifies earnings volatility. Management must balance dividends, buybacks, loan/RWA growth and strategic investment, which constrains flexibility for large M&A or opportunistic spending and can limit faster structural growth.

State Street (STT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$35.46B

Dividend Yield2.43%

Average Volume (3M)2.00M

Price to Earnings (P/E)13.5

Beta (1Y)1.05

Revenue Growth5.62%

EPS Growth49.49%

CountryUS

Employees52,711

SectorFinancial

Sector Strength70

IndustryAsset Management

Share Statistics

EPS (TTM)2.97

Shares Outstanding278,728,200

10 Day Avg. Volume1,605,131

30 Day Avg. Volume2,000,863

Financial Highlights & Ratios

PEG Ratio0.83

Price to Book (P/B)1.30

Price to Sales (P/S)1.74

P/FCF Ratio8.42

Enterprise Value/Market Cap1.88

Enterprise Value/Revenue3.22

Enterprise Value/Gross Profit4.78

Enterprise Value/Ebitda15.49

Forecast

1Y Price Target

$144.79

Price Target Upside10.01% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

EPS Forecast (FY)11.63

Revenue Forecast (FY)$14.72B

State Street Business Overview & Revenue Model

Company DescriptionState Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody; product accounting; daily pricing and administration; master trust and master custody; depotbank services; record-keeping; cash management; foreign exchange, brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded fund under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

How the Company Makes MoneyState Street generates revenue through a diversified model that primarily includes fees from investment management services and investment servicing activities. In the Investment Management segment, the company earns management fees based on a percentage of assets under management (AUM), which fluctuates with market conditions and client inflows or outflows. In the Investment Services segment, State Street charges fees for custody services, fund administration, and other related services. Additionally, the company benefits from securities lending and foreign exchange services. Significant partnerships with asset managers and institutional clients, along with a strong presence in the global financial markets, contribute to its earnings. Overall, the company's revenue is significantly influenced by market performance, client activity, and the overall demand for investment services.

State Street Key Performance Indicators (KPIs)

Any

Revenue by Type

Revenue by Type
Analyzes revenue streams such as fees, interest, and trading income, highlighting the company's diverse income sources and potential vulnerabilities or strengths in its business model.

Chart InsightsState Street's revenue from Net Interest Income has shown a steady recovery since its dip in 2023, reflecting favorable interest rate conditions. Servicing Fees and Management Fees are experiencing consistent growth, indicating strong client retention and asset management performance. Foreign Exchange Trading Services have rebounded sharply in 2025, suggesting increased market volatility or trading activity. Meanwhile, Software & Processing Fees are rising, likely due to digital transformation efforts. However, Other Income remains volatile, posing a potential risk to overall revenue stability.

Data provided by:

The Fly

State Street Earnings Call Summary

Earnings Call Date:Jan 16, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:Apr 10, 2026

Earnings Call Sentiment Positive

The earnings call conveyed a strongly positive operational and financial trajectory: record revenues, expanding margins, robust asset growth, solid capital returns, and execution on strategic initiatives (private markets, digital assets, wealth, SaaS transition, and AI-enabled transformation). Management acknowledged near-term headwinds — chiefly the on-prem to SaaS revenue transition, elevated strategic investments pushing expenses higher, some lumpiness in NII drivers, and investor valuation skepticism — but presented a credible plan (productivity savings, balance sheet optimization, and reinvestment) with constructive 2026 guidance. On balance, highlights significantly outweigh the lowlights, as most lowlights are transitional or manageable and key performance metrics and strategic momentum remain strong.

Q4-2025 Updates

Positive Updates

Strong Quarterly and Full-Year EPS Growth

Excluding notable items, fourth-quarter EPS grew 14% year over year and full-year EPS was $10.30, up 19% year over year, reflecting strong revenue growth and margin expansion.

Record Revenues and Fee Growth

Full-year total revenue was approximately $14 billion (record), up more than 7% year over year, and record full-year fee revenue was $11 billion, up 9% year over year; fourth-quarter fee revenue grew 8% year over year.

Margin Expansion and Operating Leverage

Fourth-quarter pretax margin (ex-notables) improved to ~31%; full-year pretax margin was approximately 29% (up from 28% in 2024). The company generated nearly 220 basis points of operating leverage for the full year and delivered positive operating leverage for the second consecutive year.

Record Asset Levels and Net Inflows

Record AUCA of $53.8 trillion (up 16% year over year) and record AUM of $5.7 trillion (up 20% year over year). Fourth-quarter net inflows into investment management were $85 billion.

Investment Management Momentum

Management fees rose 15% year over year to a quarterly record of $662 million in Q4; investment management delivered its third consecutive year of net new asset growth above 3% and launched a record 134 new products in 2025.

Investment Services and Private Markets Strength

Servicing fees increased 8% year over year; private markets servicing fees grew 12% in 2025 and now represent ~10% of servicing fees (up from 9% in 2024). Investment services achieved servicing fee wins of ~ $330 million for the year.

State Street Markets Performance

State Street markets produced double-digit full-year fee revenue growth in FX trading services and securities finance. In Q4, FX trading revenue increased 13% year over year and securities finance revenue increased 8% year over year.

Productivity Savings and Reinvestment

Achieved full-year productivity and other savings target of $500 million in 2025 (5.5% of underlying cost base) and nearly $2 billion cumulatively over five years, enabling aggressive reinvestment in strategic initiatives and technology.

Capital Returns and Strong Capital Position

Returned over $2.1 billion of capital to common shareholders in 2025 via repurchases and dividends. Q4 capital returned totaled $635 million ($400 million repurchases, $235 million dividends). Standardized CET1 ratio was 11.7%, up ~40 basis points sequentially.

Backlog and Software Momentum

Software-enabled revenue and front-office pipeline showed strength: front-office revenue backlog increased approximately 16% year over year while software-enabled revenues grew (management highlighted a positive transition toward SaaS).

2026 Outlook (Constructive Guidance)

2026 ex-notables guidance assumes fee revenue up 4%–6%, NII up low-single-digits, expenses up ~3%–4%, positive operating leverage in excess of 100 basis points, and a full-year pretax margin of roughly 30%.

Negative Updates

Decline in Software and Processing Fees

Software and processing fees declined 15% year over year in Q4, primarily due to lower on-premises renewals as the business transitions to SaaS; management expects the migration to SaaS to create near-term lumpiness and to normalize over 1–2 years.

Higher Operating Costs and Expense Growth

Expenses (excluding notable items) increased ~6% year over year in Q4 and full-year expenses were $9.8 billion, up 5% year over year, driven by investments in strategic initiatives and technology even after productivity savings.

Notable Items and Repositioning Charges

Fourth-quarter notable items totaled $206 million pretax (included repositioning charges tied to productivity efforts and an FDIC special assessment release), equivalent to $0.55 per share after tax, adding some quarter-specific volatility.

NII/NIM Sensitivities and Seasonality

Fourth-quarter net interest income was $802 million (up 7% year over year) with NIM at 1.1% (expansion of ~3 bps year over year), but management noted seasonal and deposit-mix effects may temper the Q4 NII run-rate and that some NII tailwinds (e.g., terminated hedges) can be lumpy quarter to quarter.

Near-Term Growth Uncertainty Linked to Market Assumptions

2026 guidance assumes largely flat point-to-point global equity markets; if market levels underperform expectations there is limited inherent market tailwind baked into the guide, creating potential upside/downside sensitivity based on market movements.

Investor Sentiment/Valuation Pressure

Management acknowledged investor frustration and relative underperformance of the stock historically; the call noted the stock was down roughly 5%–6% intraday, indicating market skepticism despite operational progress.

Balance Sheet/Capital Constraints Considerations

Although CET1 is solid, the firm still operates with internal leverage considerations and is managing capital against competing priorities (dividend growth, buybacks, loan and RWA growth, and strategic investments), which can limit immediate flexibility for larger transactions.

Company Guidance

State Street's 2026 outlook (ex‑notables) assumes global equities flat point‑to‑point (daily average roughly +11% YoY) and interest‑rate paths roughly matching two Fed cuts, one BoE cut and no ECB cuts; under those assumptions management expects fee revenue to rise 4–6%, net interest income to be up low single‑digits with net interest margin improving versus 2025, expenses to increase ~3–4% (with productivity and other savings comparable to 2025 — ~$500 million), and positive operating leverage in excess of 100 basis points. Together this guidance implies full‑year pretax margin of roughly 30%, an effective tax rate of about 22%, and a total payout to shareholders of roughly 80% (subject to board approval).

State Street Financial Statement Overview

Summary

Profitability is solid (Income Statement score 72) and leverage is moderate/improving (Balance Sheet score 66), but cash generation is a clear weak spot (Cash Flow score 41) due to large operating/free-cash-flow swings, reducing confidence in cash predictability despite decent reported margins.

Income Statement

Positive

Profitability is solid with healthy 2025 net margin (~14%) and improved operating and EBITDA margins versus 2024, while net income has trended higher than 2023. However, the top line is volatile: revenue declined ~9% in 2025 after strong growth in 2023–2024, and margins are notably below the unusually strong 2021–2022 levels. Overall, earnings power looks durable, but growth consistency is a key weakness.

Balance Sheet

Positive

Leverage is moderate: 2025 debt-to-equity is ~1.07, improved from 2024 (~1.45) but still higher than 2020–2022. Equity has grown versus 2024, and return on equity is steady around ~10–11% in 2024–2025, signaling reasonable capital efficiency. The main watch item is the variability in leverage over time, which can amplify earnings volatility in weaker revenue years.

Cash Flow

Neutral

Cash generation is the weakest area due to significant swings: operating cash flow and free cash flow were sharply negative in 2021 and 2024, then recovered to positive in 2022 and 2025 (with 2025 free cash flow roughly matching net income). Free cash flow growth is highly erratic, including a steep decline in 2025 versus the prior year. While the business can produce strong cash in some years, the inconsistency reduces confidence in cash predictability.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	20.70B	21.97B	18.37B	13.67B	12.03B
Gross Profit	13.91B	12.84B	11.90B	12.11B	12.06B
EBITDA	5.22B	4.00B	3.20B	4.48B	4.73B
Net Income	2.94B	2.69B	1.94B	2.77B	2.69B
Balance Sheet
Total Assets	366.05B	353.24B	297.26B	301.45B	314.62B
Cash, Cash Equivalents and Short-Term Investments	0.00	134.55B	136.24B	146.20B	183.45B
Total Debt	29.80B	36.79B	24.37B	18.27B	15.18B
Total Liabilities	338.21B	327.91B	273.46B	276.26B	287.26B
Stockholders Equity	27.84B	25.33B	23.80B	25.19B	27.36B
Cash Flow
Free Cash Flow	4.29B	-14.14B	-126.00M	11.22B	-7.52B
Operating Cash Flow	5.35B	-13.21B	690.00M	11.95B	-6.71B
Investing Cash Flow	-13.05B	-39.48B	12.74B	6.82B	-2.17B
Financing Cash Flow	8.99B	51.79B	-13.35B	-18.43B	9.05B

State Street Technical Analysis

Technical Analysis Sentiment

Positive

Last Price131.62

Price Trends

50DMA

129.80

Positive

100DMA

123.18

Positive

200DMA

114.25

Positive

Market Momentum

MACD

-0.29

Positive

RSI

54.63

Neutral

STOCH

47.36

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STT, the sentiment is Positive. The current price of 131.62 is above the 20-day moving average (MA) of 129.80, above the 50-day MA of 129.80, and above the 200-day MA of 114.25, indicating a bullish trend. The MACD of -0.29 indicates Positive momentum. The RSI at 54.63 is Neutral, neither overbought nor oversold. The STOCH value of 47.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STT.

State Street Risk Analysis

State Street disclosed 38 risk factors in its most recent earnings report. State Street reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

State Street Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BK	78 Outperform	$80.21B	15.75	12.96%	1.71%	4.22%	51.01%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
AMP	67 Neutral	$42.51B	12.85	60.51%	1.26%	5.76%	39.77%
STT	66 Neutral	$35.46B	13.53	11.07%	2.43%	5.62%	49.49%
CG	59 Neutral	$18.34B	23.34	12.77%	2.30%	-24.62%	437.16%
NTRS	58 Neutral	$26.74B	16.19	13.37%	2.21%	-4.52%	7.01%

* Financial Sector Average

Performance Comparison

STT

State Street

131.62

36.94

39.01%

AMP

Ameriprise Financial

478.25

-41.06

-7.91%

Bank of New York Mellon

120.31

35.21

41.38%

Carlyle Group

51.55

4.26

9.01%

NTRS

Northern

145.74

39.54

37.23%

State Street Corporate Events

Business Operations and StrategyFinancial Disclosures

State Street posts strong fourth-quarter results, eyes 2026 growth

Positive

Jan 16, 2026

On January 16, 2026, State Street reported that its fourth-quarter 2025 results capped what management described as a year of strong performance and strategic progress, with Q4 diluted EPS of $2.42, or $2.97 excluding notable items, on total revenue of $3.67 billion, up 7% year-on-year. The quarter saw record fee and total revenue, net interest income growth, and positive operating leverage, with reported pre-tax margin at 25.0%, ROE at 11.3% and ROTCE at 17.5%, alongside improved ex-notable metrics such as 30.7% pre-tax margin and 21.5% ROTCE, signaling stronger underlying profitability; management highlighted continued momentum across Investment Services, Investment Management and Markets, as well as the strategic expansion of Wealth Services, positioning the firm for further growth and operational transformation in 2026.

The most recent analyst rating on (STT) stock is a Buy with a $151.00 price target. To see the full list of analyst forecasts on State Street stock, see the STT Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 20, 2026